BILL ANALYSIS
SB 816
Page 1
SENATE THIRD READING
SB 816 (Ducheny)
As Amended August 31, 2009
Majority vote
SENATE VOTE :32-2
REVENUE & TAXATION 6-3 APPROPRIATIONS 10-5
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|Ayes:|Charles Calderon, Beall, |Ayes:|De Leon, Ammiano, Charles |
| |Coto, Ma, Portantino, | |Calderon, Coto, Davis, |
| |Saldana | |Fuentes, Hall, |
| | | |John A. Perez, Skinner, |
| | | |Torlakson |
| | | | |
|-----+--------------------------+-----+---------------------------|
|Nays:|DeVore, Harkey, Hagman |Nays:|Nielsen, Duvall, Harkey, |
| | | |Miller, |
| | | |Audra Strickland |
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SUMMARY : Implements various changes to the Revenue & Taxation
Code (R&TC) sponsored by the California Assessors' Association.
Specifically, this bill :
1)Requires the county assessor to disclose information, furnish
abstracts, or permit access to all records in his/her office
to the county recorder when conducting an investigation to
determine whether a documentary transfer tax is imposed.
2)Modifies the trigger for imposing an existing penalty for the
failure to file a change in ownership statement.
Specifically, the penalty shall be imposed for the failure to
file a change in ownership statement within 45 days from the
earlier of:
a) The date of the change in control (or ownership) of the
corporation, partnership, or limited liability company
(LLC); or,
b) The date of a written request by the Board of
Equalization (BOE).
3)Deletes statutory language providing that the penalty shall be
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automatically extinguished if the relevant party files a
complete statement no later than 60 days after the date on
which the party is notified of the penalty.
4)Provides that any ordinance adopted pursuant to the
Documentary Transfer Tax Act may include an administrative
appeal process for resolution of disputes related to the
documentary transfer tax.
5)Specifies that, whether the amount of documentary transfer tax
is determined by an administrative appeal process or
established by a court, the value of the property established
for purposes of determining the amount of documentary transfer
tax due shall not be binding on the determination of the value
of that property for property tax purposes.
6)Specifies that no reimbursement is required by this bill
because local agencies and school districts have the authority
to levy service charges, fees, or assessments sufficient to
pay for the services mandated.
EXISTING LAW :
1)Requires the county assessor to disclose information, furnish
abstracts, or permit access to all records in his/her office
to law enforcement agencies, the county grand jury, and other
specified entities.
2)Provides that, whenever there is a change in control of any
corporation, partnership, LLC, or other legal entity, the
party acquiring ownership control must file a signed change in
ownership statement with the BOE at its office in Sacramento.
Similarly, whenever there is a change in ownership of any
corporation, partnership, or LLC, a signed change in ownership
statement must be filed.
3)Imposes a penalty for the failure to file a change in
ownership statement within 45 days from the date of a written
request by BOE. The penalty is equal to 10% of the taxes
applicable to the new base year value reflecting the change in
control (or ownership) of the real property owned by the
business (or 10% of the current year's taxes on that real
property if no change in control or ownership occurred).
FISCAL EFFECT : BOE notes that this bill has no direct revenue
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impact. However, establishing a penalty for not self-reporting
and filing a change in ownership statement with BOE may be an
incentive for legal entities to properly file a change in
ownership statement when a change in ownership occurs.
COMMENTS : The author states, "SB 816 requires that the existing
10% penalty be applied on taxes due for the year when a new
business owner fails to file a change in ownership statement
with the BOE within 45 days of a change of ownership or control.
Under current law, the penalty is only applied after a written
request for filing is sent from the BOE. This has resulted in
multi-year delays in reassessments of business properties and
losses of hundreds of millions in taxes to State and Local
Governments."
Committee Staff Comments
1)Discovering a change in ownership:
a) R&TC Section 255.7 provides that, whenever a change of
ownership is recorded in the county recorder's office, the
county recorder must provide the assessor with a copy of
the transfer of ownership document as soon as possible.
BOE notes that county assessors discover most changes in
real property ownership through grant deeds or other
recorded documents. However, with respect to property
owned by a legal entity, the property may "change
ownership" under the law, but no grant deed or other
document is recorded to alert the assessor to the need for
reassessment. Thus, discovery of these ownership changes
is largely dependent on self-reporting by the legal
entities.
b) Existing law provides that, whenever there is a change
in control of any corporation, partnership, LLC, or other
legal entity, the party acquiring ownership control must
file a signed change in ownership statement with BOE.
Similarly, whenever there is a change in ownership of any
corporation, partnership, or LLC, a signed change in
ownership statement must be filed. However, no penalty is
imposed if the statement is not filed within the 45-day
period specified in law. Rather, the penalty applies only
if a legal entity does not timely respond to a direct BOE
request to file a change in ownership statement.
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c) This bill would amend existing law to provide for the
imposition of a penalty if a change in ownership statement
is not filed within 45 days of the earlier of: i) The date
of the event triggering the reassessment; or, ii) the date
BOE makes a written request to file a statement. Thus,
when there is a change in control or ownership of a
business entity, the business must file a change in
ownership statement within 45 days of the event, with or
without a written request from BOE, or a penalty will be
imposed.
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098
FN: 0002536